Surviving Disruption

A combination of technology and lifestyle changes is bound to disrupt your business, if it hasn't. Change is inevitable, and disruption isn't a 21st century invention.?It's simply a new word to explain change.?

Farmers in the 15th century selling directly to clients were disrupted by the emergence of weekend markets which in turn were disrupted by specialist grocers which in turn were disrupted by supermarkets that were disrupted by hypermarkets which are now disrupted by online groceries.?

New trades and new businesses will continue to appear, some of which will complement yours, while others will challenge it.

Now that we've established that disruption is nothing more than a new word for something we know, what can we do about it?

First, we must understand that nothing ever becomes totally irrelevant. The invention of modern antibiotics could've killed penicillin. It hasn't. The invention of penicillin itself was said to make traditional medicine irrelevant. It hasn't.?

Horses were not made obsolete with the invention of the car. They simply migrated their 'industry' from transportation to recreation. Photography didn't kill painting. In fact, impressionism and cubism became popular after the invention of the camera.?

We simply need to?find new meaning and new use for what we do. Staying relevant is more about meeting consumer needs and solving their problems than it is about spotting cool products. Just as not everything 'old' is irrelevant, not everything new is necessarily relevant. In short, listen to the naysayers, but ignore most of it.

Second, realise that smart business models are essential to the longterm survival of businesses, but they are not the only ingredient to building a great business. All of us have had meals made from low-cost ingredients, yet because a great chef worked on it, it tasted heavenly (and you probably paid a heavenly price for it too). Similarly, we've also had meals made from top-of-the-line ingredients, with minimal treatment or cooking, and they tasted great all the same.

In business, it's 20 percent planning and 80 percent execution. Terry Neill, former chairman of Accenture sums it best: "winners out-execute rather than outstrategize their competitors."

Every visitor to Taipei would have heard of the city's celebrated bookstore,?Eslite. Not only has the company survived the onslaught of online bookstores, they have thrived in recent years. While bookstores are closing down elsewhere, the company has expanded into new markets and now has over 50 stores across Taiwan, Hong Kong and mainland China and soon, Malaysia.

The success of Eslite is as much a result of their challenging the norm (like opening a 24-hours store and introducing art and lifestyle into their stores), as it is their disciplined execution of their strategy.

The simplest way to?counter disruptive competitors is to execute your business well.

When Apple launched the eMac, my first thought was 'eww'; a green computer, anyone? But that eMac became a phenomenal success, and was the precursor to sealing Apple's reputation as an innovator. It was more about flawless execution than it was about creative ingenuity.

Third, focus on your?non-disruptible offerings. In theory, new technologies and improved business models have empowered disruptors to take over the markets served by traditional businesses. In reality, every business has its Archilles’ heel. For businesses that are new and focused on growth, that weakness are often more than one, and can be easily exploited if you just know how.

Consider the case of online grocers versus brick and mortar grocers. Two non-disruptible offerings are apparent: unless online grocers are willing to invest heavily on a cold-chain (and even if they do), they are highly susceptible to perishability of products. Hence, focus on perishable products. As most online grocers either employ their own delivery trucks or outsource them to logistics companies, delivery time is often limited. As such, there’s room for ‘last minute’ products. Consider this: if you have a bad migraine and need a painkiller fast, would you run to your nearest pharmacy or would you rather order them online?

Fourth,?define your own category. That’s what disruptive businesses are doing. We’ve all heard of how Uber is now the largest transportation company but owns no vehicle (not true, by the way), or how Airbnb is the largest hospitality company but owns no room (not true either as technically they are a marketplace, not a hospitality company).

As we know now, disruption is not something new. IBM, which first made their fortune with the invention of the mainframe computer was at the brink of failure with the introduction of the mini-computers: machines that works just as well, but at one-tenth of the cost of what IBM was selling. What did IBM do? They invented the personal computer, of course. But then they got disrupted again, when the personal computer became almost a commodity, margins shrunk, and the battle was won or lost at distribution. So IBM sold their PC business (a cash cow even then), and focused on services.

Used car as an industry had a bad rap because of pushy salespeople and dubious product claims. So they are now more prone to calling themselves 'pre-loved' auto markets. Similarly, quick service restaurants sound a lot posher (and healthier) than fast food joints. Defining your own category is however not merely semantics. You absolutely need a pivot.

By the way, the term 'pivot' itself is not something new. As every good entrepreneur knows, when what you are doing doesn't work, try doing it differently. Or doing something new altogether. A pharmacy could open round-the-clock, while an online pharmacy would be limited by logistics.

Disruptive competitors often resemble an eight foot giant. But remember, every giant has its weak spot. Your job is to find that weak spot. Use disruption wisely. It's what makes entrepreneurship such an exciting journey.

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